Is FedEx Stock Poised for Growth After Recent Earnings Rebound?

If you’ve been eyeing FedEx stock and wondering if now is the time to make a move, you’re definitely not alone. With shares closing recently at $235.8, investors find themselves in the classic tug-of-war between value and momentum. Over the past week, the stock slipped by 1.7%, not a huge swing but just enough to make some folks cautious. In the past month, though, FedEx rebounded with a solid 4.5% gain, hinting that confidence in its long-term story might be reviving. Year to date, the stock is down 14.0%, and if we stretch out to a full year, it’s still off by 11.2%. But glance back three years and FedEx actually comes out well ahead, up an impressive 64.7%. This suggests resilience and underlying strength in the business even during volatile times.

Recent market chatter has highlighted shifting consumer behaviors and continued supply chain adaptation, both areas where FedEx naturally plays a lead role. These larger trends have caused some turbulence in shipping stocks, with adjustments in risk perception rippling through the sector. Another point of interest for investors is that FedEx comes out with a valuation score of 5 out of 6 on our undervaluation checklist. This means it passes nearly every test savvy investors look for when hunting for bargains in the market.

So, how exactly do we arrive at this score? Let’s dig into the valuation methods most investors rely on, and stick around until the end because I’ll share an even more insightful angle on understanding what FedEx might really be worth.

FedEx delivered -11.2% returns over the last year. See how this stacks up to the rest of the Logistics industry.

Approach 1: FedEx Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model helps estimate the true worth of a company by projecting its future cash flows and discounting them back to today’s dollars. Essentially, it answers the question, “How much are FedEx’s expected future earnings worth right now?”

FedEx’s current Free Cash Flow sits at approximately $2.63 billion. Analyst forecasts stretch out over the next several years, with cash flows expected to rise steadily and reach about $7.1 billion by 2035. While detailed analyst estimates are available through 2028, projections beyond that are based on growth trends and industry estimates. All values are calculated in US dollars.

When running these numbers through the two-stage Free Cash Flow to Equity DCF model, FedEx’s intrinsic value comes out to $386.67 per share. This is 39.0% above its recent share price of $235.8, signaling the market might be significantly underestimating FedEx’s underlying cash-generating power.

In summary, the DCF approach suggests FedEx stock is trading well below its true value, offering a compelling case for investors looking for undervalued opportunities.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for FedEx.

Our Discounted Cash Flow (DCF) analysis suggests FedEx is undervalued by 39.0%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: FedEx Price vs Earnings (PE Ratio)

The Price-to-Earnings (PE) ratio is a go-to valuation approach for companies like FedEx that are consistently profitable. This measure helps investors see how much they are paying for every dollar of the company's earnings, which is a crucial gauge when earnings are robust and recurring.

What counts as a “fair” PE can depend on growth prospects and perceived risks. Companies expected to deliver strong future growth can justify higher PE ratios, while those with slower growth or higher risks usually trade at lower multiples.

FedEx currently trades at a PE ratio of 13.5x. This is below both the industry average of 15.8x and the peer group average of 17.9x, indicating FedEx shares are priced more conservatively than its typical competitors.

To add another layer, Simply Wall St's "Fair Ratio" calculates what a truly appropriate multiple would be for FedEx. This proprietary metric weighs not just industry standards and peer groups, but also considers FedEx’s specific profit margins, growth outlook, size, and risk profile. Because of these tailored inputs, the Fair Ratio offers a more refined valuation benchmark than raw peer or industry averages alone.

For FedEx, the Fair Ratio stands at 17.7x, which is noticeably higher than its actual PE ratio of 13.5x. This gap suggests the market is assigning a lower value to FedEx’s earnings than what might be justified by its fundamentals.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your FedEx Narrative

Earlier we mentioned there’s an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is your story or perspective on a company; essentially, it’s how you connect what you know about FedEx with the numbers, by estimating what you think its future revenue, earnings, and fair value should be.

This approach links your view of FedEx’s real-world developments, strategies, and risks directly to fully quantified forecasts and a calculated fair value. This makes your investment decision more meaningful and personalized. Narratives are easy to use and available right on Simply Wall St’s Community page, where millions of investors share and debate their perspectives.

They give you a clear, visual way to see if your own fair value is above or below today’s price, making it easier to decide when to buy or sell. Since Narratives update dynamically when news or earnings reports are released, your analysis can keep up with the market.

For example, some investors see FedEx delivering aggressive margin improvements and set their Fair Value near $320, while others focus on ongoing economic and industry risks and feel it’s only worth $200. Whatever your view, Narratives help you clarify and back up your investment decisions with evidence and community insight.

Do you think there's more to the story for FedEx? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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